UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark one)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________ to __________
Commission File Number: 33-32966
The Great American Golf Works, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 22-2999829
------------------------ ----------------------------
(State of incorporation) (IRS Employer ID Number)
2 Cottage Place, Nutley NJ 07110
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(973) 667-5901
---------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES X NO
The number of shares outstanding of the Issuer's Common Stock, $0.0005 par
value, as of December 11, 2000, was 38,124,000.
Transitional Small Business Disclosure Format (check one): YES No X
<PAGE>
The Great American Golf Works, Inc.
Form 10-QSB for the Quarter ended September 30, 2000
Table of Contents
Page
Part I - Financial Information
Item 1 Financial Statements
Condensed Balance Sheet- 3
September 30, 2000 and December 31, 1999
Condensed Statement of Operations-
Three and nine months ended September 30, 2000 and 1999 4
Condensed Statement of Changes in Stockholder's equity
September 30, 2000 and December 31, 1999 5
Condensed Statement of Cash Flows
Nine months ended September 30, 2000 and 1999 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2 Management's Discussion and Analysis or Plan of Operation 8-9
Part II - Other Information
Item 1 Legal Proceedings 9
Item 2 Changes in Securities 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6 Exhibits and Reports on Form 8-K 10
Signatures
/s/
------------------------
Hongsheng WANG
President
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1 - Financial Statements
The Great American Golf Works, Inc.
Condensed Balance Sheet (unaudited)
(Expressed in U.S. Dollars)
September 30, December 31,
2000 1999
------------- ------------
Assets
Current assets:
Cash and cash equivalents 2,895,565 56
Accrued interest income 31,003 -
Other receivables 11,388 -
---------- ---------
Total assets 2,937,956 56
========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Other payables 138,496 -
Accrued payroll 54,000 -
---------- ---------
Total liabilities 192,496 -
---------- ---------
Stockholders' equity:
Common stock
$0.0005 par value, 110,000,000
(1999: 50,000,000) shares authorized;
38,124,600 (1999: 624,600) shares
issued and outstanding 19,062 312
Additional paid-in capital 7,915,912 134,957
Due from shareholders [note 3(b), 3(c)] (5,043,767) -
Accumulated deficit (145,747) (135,213)
---------- ---------
Total stockholders' equity 2,745,460 56
---------- ---------
Total liabilities and stockholders' equity 2,937,956 56
========== =========
The accompany notes are an integral part of the condensed
financial statements.
<PAGE>
<TABLE>
The Great American Golf Works, Inc.
Condensed Statement of Operations (unaudited)
(Expressed in U.S. Dollars)
<CAPTION>
Three months ended September 30, Nine months ended September 30,
-------------------------------- -------------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue - - - -
Operating expenses
General and administrative expenses 165,432 2,230 279,365 2,230
----------- ---------- ----------- ----------
Total operating expenses 165,432 2,230 279,365 2,230
----------- ---------- ----------- ----------
Operating loss (165,432) (2,230) (279,365) (2,230)
----------- ---------- ----------- ----------
Other income (expenses)
Interest income 115,515 - 268,905 -
Other income (expenses) 19,471 - (74) -
----------- ---------- ----------- ----------
Total other income, net 134,986 - 268,831 -
----------- ---------- ----------- ----------
Net loss (30,446) (2,230) (10,534) (2,230)
=========== ========== =========== ==========
Basic earnings per weighted-average
common stock outstanding - - - -
=========== ========== =========== ==========
Weighted-average number of shares
of common stock outstanding 38,124,600 624,600 35,825,329 624,600
=========== ========== =========== ==========
</TABLE>
The accompany notes are an integral part of the condensed
financial statements.
<PAGE>
<TABLE>
The Great American Golf Works, Inc.
Condensed Statement of Changes in Stockholders' Equity (unaudited)
(Expressed in U.S.Dollars)
<CAPTION>
Additional
Common Stock paid-in Due from Accumulated
Shares Amount capital Shareholder deficit Total
---------- -------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,1999 624,000 312 134,957 - (135,213) 56
Issuance of common stock 37,500,000 18,750 7,780,955 - - 7,799,705
Net income for the period - - - - 3,035 3,035
---------- -------- --------- ---------- ---------
Balance at March 31, 2000 38,124,600 19,062 7,915,912 - (132,178) 7,802,796
Loan to shareholder - - - (7,000,000) - (7,000,000)
Loan repayment from
shareholder - - - 3,000,000 - 3,000,000
Loan interest receivable
from shareholder - - - (55,685) - (55,685)
Net income for the period - - - 16,877 16,877
---------- -------- --------- ---------- --------- ----------
Balance at June 30, 2000 38,124,600 19,062 7,915,912 (4,055,685) (115,301) 3,763,988
Loan to shareholder - - - (1,000,000) - (1,000,000)
Loan interest repayment
from shareholder - - - 95,959 - 95,959
Loan interest receivable
from shareholder - - - (84,041) - (84,041)
Net loss for the period - - - (30,446) (30,446)
---------- -------- --------- ---------- --------- ----------
Balance at
September 30, 2000 38,124,600 19,062 7,915,912 5,043,767 (145,747) 2,745,460
========== ======== ========= ========== ========= ==========
</TABLE>
The accompany notes are an integral part of the condensed financial
statements.
<PAGE>
The Great American Golf Works, Inc.
Condensed Statement of Cash Flows (unaudited)
(Expressed in U.S. Dollars)
Nine months ended September 30,
2000 1999
----------- -----------
Operating activities
Net loss (10,534) (2,230)
Adjustments to reconcile net loss to
net cash used in operating activities:
Increase in other receivables (11,388) -
Increase in accrued interest income (31,003) -
Increase in accounts payable - 2,250
Increase in accrued payroll 54,000 -
Increase in other payable 138,496 -
----------- ---------
Cash provided by operating activities 139,571 20
----------- ---------
Investing activities:
Purchase of marketable equity securities - (10,000)
----------- ---------
Cash used in investing activities - (10,000)
----------- ---------
Financing activities:
Proceeds from issuance of common stock 7,799,705 -
Loan to shareholder [note 3(b), 3(c)] (8,000,000) -
Repayment of loan from shareholder [note 3(b)] 3,000,000 -
Interest on loan to shareholder (43,767) -
Advances from controlling shareholder - 10,100
----------- ---------
Cash provided by financing activities 2,755,938 10,100
----------- ---------
Net increase in cash and cash equivalents 2,895,509 120
Cash and cash equivalents at beginning of period 56 -
----------- ---------
Cash and cash equivalents at end of period 2,895,565 120
=========== =========
Supplemental Disclosure of Non-Cash Investing
and Financing Activities-Distribution of
market equity securities to shareholders as
property dividend - 2,730
=========== =========
The accompany notes are an integral part of the condensed financial
statements.
<PAGE>
The Great American Golf Works, Inc.
Notes to Condensed Financial Statements (unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation.
The condensed interim financial statements are unaudited. We prepared
these financial statements in accordance with the instructions for Form
10-QSB and therefore, did not include all information and footnotes
required by generally accepted accounting principles. In our opinion, we
made all the adjustments (consisting only of normal recurring
adjustments) necessary to fairly present our consolidated results of
operations, financial position and cash flows as of September 30, 2000
and for all periods presented. A description of our accounting policies
and other financial information is included in the audited consolidated
financial statements filed with the Securities and Exchange Commission in
the Great American Golf Works's Form 10-KSB for the year ended December
31, 1999. The results of operations for the nine months ended September
30, 2000 are not necessarily indicative of the results expected for the
full year.
Because of the Company's lack of operating assets, its continuance is
fully dependent upon the majority shareholder's continuing support. The
majority shareholder intends to continue the funding of nominal necessary
expenses to sustain the corporate entity.
2. Common stock transactions
On December 22, 1999, the Company's Board of Directors authorized a
change to the authorized shares from 2,000,000 to 50,000,000 shares.
There was no change in the Company's stated par value of $0.0005 per
share.
On January 7, 2000, pursuant to a stock purchase agreement, the Company's
then controlling shareholder sold 329,330 shares (the "Shares") of the
Company's outstanding common stock to Resplendent Investment Limited, a
British Virgin Islands Corporation ("Resplendent"). The Shares
represented approximately 53% of the total number of issued and
outstanding shares of the Company on January 7, 2000.
On January 11, 2000, pursuant to the Company's Board of Directors
resolution, the Company issued 30,000,000 restricted common shares to
Resplendent, for gross proceeds of $300,000 which was received on
February 22, 2000. Restricted common shares have not been registered
under the Securities Act of 1933, as amended (the "Act") or applicable
state securities laws. Accordingly, restricted shares cannot be
transferred or sold unless subsequently registered under the Act or an
exemption from such registration is available.
On January 21, 2000, pursuant to the Company's Board of Directors
resolution, the Company issued 10,000,000 restricted common shares to
certain investors for a subscription price of $ 1.00 per share. On
February 28, 2000, the Company received $7,500,000 for 7,500,000 of the
restricted common shares issued on January 21, 2000. The remaining
2,500,000 restricted common shares that had been subscribed are
classified as
<PAGE>
authorized but unissued shares because the related subscriptions
receivable have not been collected.
On February 8, 2000, the Company's Board of Directors authorized a
further increase of the authorized shares from 50,000,000 to 110,000,000
shares. There was no change in the Company's stated par value of $ 0.0005
per share.
3. Related party transactions
(a) In February 2000, the Company entered into subscription agreements
with various investors for 100,600 restricted common shares of the
Company for $ 5.00 per share. In connection with these subscription
agreements, the investors advanced a total of $ 503,000 to the Company.
Subsequent to March 31, 2000, the Company and the investors agreed to
cancel the related subscription agreements and the Company returned $
400,000 of the advances to certain investors. Subsequent to June 30,
2000, the Company returned the remaining advances of $ 103,000 to an
investor.
(b) On May 17, 2000, pursuant to a loan agreement, the Company made a
loan to Chatterton Resources Limited ("Chatterton"), a shareholder of the
Company, in the amount of $ 7,000,000. The term of the loan is from May
19, 2000 to November 18, 2000 and carries an annual interest rate of
7.5%. Interest is payable on August 18, 2000 and on maturity of the loan.
Chatterton has pledged 4,000,000 common shares of the Company in escrow
as security for the loan. On June 21, 2000, Chatterton repaid $3,000,000
of the loan to the Company. The outstanding amount of the loan has been
classified as a reduction of stockholders' equity.
(c) On August 26, 2000, pursuant to a loan agreement, the Company made a
loan to Resplendent in the amount of $ 1,000,000. The term of the loan is
from August 21, 2000 to February 20, 2001 and carries an annual interest
rate of 7.5%. Interest is payable on November 21, 2000 and on maturity of
the loan. Resplendent has pledged 1,000,000 common shares of the Company
as security for the loan. The amount of the loan has been classified as a
reduction of stockholders' equity.
4. Subsequent event
On October 23, pursuant to a loan agreement, the Company made a loan to
Resplendent in the amount of $ 400,000. The term of the loan is from
October 23, 2000 to April 22, 2001 and carries an annual interest rate of
7.5%. Interest payable on January 22, 2001 and on maturity. Resplendent
has pledged 400,000 common shares of the Company as security for the
loan.
<PAGE>
Item 2 - Management's Discussion and Analysis or Plan of Operation.
Information contained in this report of The Great American Golf Works, Inc.
(the Company"), contains forward-looking statements such as statements of
plans, expectations and intentions, that can often be identified by the use of
forward-looking terminology, such as "may", "will", "expect", "anticipate",
"believe", "plan", "intend", "could" or "estimate", or other variations of
these terms or comparable terminology. All forward-looking statements involve
risks and uncertainties, and actual results could differ materially from those
set forth in the forward-looking statements. The cautionary statements made in
this Report should be read as being applicable to all forward-looking
statements wherever they appear in this Report. The Company's actual results
could differ materially from those discussed herein.
The Company's plan of operation is to seek, investigate, and if such
investigation warrants, acquire an interest in one or more business
opportunities presented to it. Although the Company is not required to
restrict its search to any specific business, industry, or geographical
location, it has recently decided to focus its search on companies in cable
television related businesses in China. Management is currently in the process
of identifying suitable candidates for acquisition. However, if management
subsequently decides that these companies are not suitable candidates, or if a
suitable candidate in another industry is located, management reserves the
right to complete transactions with another company or companies including
those in other industries. As of September 30, 2000, the Company had not
signed any letters of intent or entered into any agreements with suitable
acquisition candidates.
The P.R.C. currently has extensive restrictions on foreign investment and
participation in its cable television industry. The Company will attempt to
structure its prospective projects in order to comply with such laws. However,
there can be no assurance that the Company will be able to do so or that the
P.R.C. laws will not be changed in a manner that would adversely affect the
Company or its planned projects.
In the coming quarters, the Company intends to continue its efforts to
identify suitable acquisition candidates, and, if a suitable candidate is
found, to seek to complete a business acquisition.
Currently, the Company has sufficient cash resources to meet its immediate
needs. In the next 12 months, the Company will determine whether to raise
additional funds according to accomplishment of the Plan of Operation.
The Company does not expect any purchase of plant and significant equipment
and does not expect any significant changes in the number of employees.
<PAGE>
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings.
None
Item 2 - Changes in Securities.
None
Item 3 - Defaults on Senior Securities.
None
Item 4 - Submission of Matters to a Vote of Security Holders.
None
Item 5 - Other Information.
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit Description
10.1 Loan Agreement between the Company and
Resplendent Investment Limited dated as of
August 20, 2000
(b) Form 8-K -- None
<PAGE>
Exhibit 10.1
LOAN AGREEMENT
This Loan Agreement (this "Agreement") is entered into in Beijing, China on
August 20, 2000 by and between The Great American Golf Works. Inc., a company
incorporated in the of State of Delaware, USA ("GAGW") and Resplendent
Investment Limited, a company incorporated in British Virgin Island
("Resplendent").
WHEREAS, GAGW wishes to provide a loan to Resplendent.
WHEREAS, Resplendent will pledge 1,000,000 common shares of GAGW as security
for the loan.
NOW, THEREFORE, the parties agree as follows.
1. Loan
GAGW hereby agrees to make a loan to Resplendent in the amount of
US$1,000,000.00 (Say US Dollars One Million Only). The term of the loan shall
be from August 21, 2000 to February 20, 2001 and will carry an annual interest
at the rate of 7.5%. Interest shall be payable on November 21, 2000 and on
maturity. Resplendent hereby promises to repay the loaned amount plus any
interest accrued upon maturity on February 20, 2001.
2. Security non-recourse
Resplendent hereby pledges 1,000,000 common shares of GAGW as security
for the loan and agrees to remit forthwith-endorsed certificate to GAGW.
Failure to make the payment in full on the maturity date shall entitle GAGW to
cancel the said shares in satisfaction of the loan. The parties agree that
Resplendent's liability to GAGW shall be limited to the said shares. Upon
cancellation of the said shares, if any, GAGW shall have no further recourse
to Resplendent or any of its officers, directors or shareholders.
3. Resplendent as Shareholder
GAGW hereby agrees that until actual cancellation of the said shares,
Resplendent shall still be entitled with the ownership of the shares, and
Resplendent shall be able to exercise all rights of a shareholder of GAGW,
including the right to participate and vote in shareholders meetings of GAGW.
<PAGE>
THIS AGREEMENT IS DULY SIGNED BY THE AUTHORIZED REPRESENTATIVES OF THE PARTIES
ON THE DATE FIRST ABOVE WRITTEN.
The Great American Golf Works, Inc.
By: /s/ Hongsheng Wang
-------------------------
Name: Hongsheng WANG
Title: President
Resplendent Investment Limited
By: /s/Adams Yang
-------------------------
Name:
Title:
